A competitive market is made up of 100 identical firms. Each firm has a short-run marginal cost function as follows:
MC = 5 + 0.5Q,
where Q represents units of output per unit of time. The firm's average variable cost curve intersects the marginal cost at a vertical distance of 10 above the horizontal axis. Determine the market short-run supply curve. Calculate the price that would make 2,000 units forthcoming per time period. Note the minimum price at which any quantity would be placed on the market.

The market supply curve is the horizontal summation of the individual firms' MC curves above the intersection with the respective average variable cost curves. We must express the quantity in terms of MC or:
Q = 2MC - 10.
Now add the 100 short-run supply curves together:
Q₁ = 2MC - 10
Q₂ = 2MC - 10
. . .
. . .
. . .
Q₁₀₀ = 2MC - 10
^{__________________________} = 200MC - 1000
Now, solve for MC
MC = MC = 0.005ΣQ + 5 (above MC = 10)
At ΣQ = 2000, the price would be
P = MC = 0.005(2000) + 5 = $15 per unit.
The lowest point on the supply curve would be just above the intersection with the average variable cost curve (at 10 units above the horizontal axis).